Now Jen is on a mission to inspire and empower others through financial education so they too can enjoy the life they want to live. Jen shares her recipe for success, happiness and financial freedom via writing, blogging, speaking and coaching. As part of her commitment to community, Jen pledges her blogging profits as 0% microloans through Kiva.org to small businesses operated by working, impoverished women in developing countries.

Financial Illiteracy: An Epidemic With A Simple Cure

How do we learn about money? 80% of parents surveyed believe that schools provide classes for their children on money management and budgeting.

Sorry to break the bad news, Mom and Dad — your kiddos probably aren’t learning personal finance in school. Our school system requires English, math and science, but not a practical life-skills class like financial literacy. Ridiculous, isn’t it? I am all in favor of a well-rounded education, but what good is it if students learn where Shakespeare was born, but not what a tax-deferred retirement plan is? Or that n2 = x, but not that if you use Payday loans, you could pay an outrageous 1560% in annual interest!

Once we graduate from high school, the vast majority of us are responsible for earning an income, establishing and maintaining a respectable credit score, balancing our bank account, and saving for our future. We deal with money decisions almost daily — yet we are taught nothing about personal finance in school.

Braun Mincher (Braun Media, LLC) is currently producing a feature-length documentary film which exposes the financial illiteracy epidemic in order to bring awareness to this important topic. Braun’s goal is to show viewers why taking personal responsibility for their own financial wellbeing is so important. He wants to expose how little parents and the school system are doing to prepare the next generation for this growingly complex and relevant topic.

Braun conducted over 100 interviews with a wide variety of people: students, parents, educators, consumers, government officials, celebrities and personal finance experts. I was honored to be one of his interviewees. Here’s a short video teaser clip of my own money-life story and response to his million dollar question: “If financial literacy education is so important, then why are we not requiring schools to teach the subject, especially considering the current economic situation?”

Incidentally, I think it’s supposed to look like I’m sitting at my desk but the office I was interviewed in is not mine — naturally, my office is wallpapered with family photos, colorful Treasure Maps (aka vision boards) and cute puppies!

I’ve served as a volunteer Junior Achievement instructor and have taught students basic economic, personal finance and small business management concepts. The kids and their teacher loved the program. So did the parents — in fact, several of the student’s parents had their kids ask me pressing, personal finance questions for them. Yet the only administrators in my area interested in offering the course were those managing private schools. There is a pathetic 2.3% percent national market penetration at the high school level — and Junior Achievement classes are offered for free!

What about you: Did your parents pass along their financial literacy skills to you? Were you taught personal finance in school? Do you think schools should be required to teach money management skills? And finally, if the cure for financial illiteracy is so simple, then why aren’t we doing it?

42 thoughts on “Financial Illiteracy: An Epidemic With A Simple Cure”

I actually met Braun while he was shooting a scene for this video (a friend of mine is in it as well). He is a great guy and very dedicated to this cause. I could just see it in his eyes that he is passionate about this. I think it will be a great film and hopefully will open up the eyes of many Americans. Congrats on being included!

I received very basic financial skills from my parents. The normal personal finance stuff (spend less than you earn, budget, shop around for best deal, etc.). The more advanced stuff (investing, 401k, etc.) was self-taught.

I was not taught any personal finance in high school. Of course, they should teach it to everyone. If they would at least provide classes on budgeting, interest rates, loans, and credit cards we might reduce the amount of people buried in debt. This alone would be 80% of the battle.

I’m less inclined to teach investing in high school, as there is no “right” answer. Everything works at some point. For instance, dollar cost averaging into broad market funds worked for a while, but it hasn’t been a very good strategy over the last 2 years and probably won’t be for the next few.

Why aren’t they doing it? It’s the same reason 98% of mutual fund managers buy the same stocks. If you are doing the same thing as everyone else you can’t get in trouble (the path of least resistance). If you do something different than the vast majority you will either be very successful or fail. Both, success and failure bring their own problems, and most people, even the supposed “driven” people, would prefer to fly under the radar. Thus, no personal finance classes until everyone pushes for them.

My parents had some money but were frugal. They bought good quality products, healthy food, good shoes, but never splurged on luxury, didn’t travel, drove used cars, only bought a color tv when they couldn’t find a b&w tv anymore, never got cable… I didn’t understand back then, I wanted to consume!
Only now, many years later, I’m starting to understand and share their values.

Didn’t learn about money in school. Good thing I had the example of my parents. Kids who don’t have any financial role models need to be taught that credit is dangerous and “advice” from the finance industry cannot be blindly trusted.

Why is nothing being done? Probably because so far nobody saw a serious need to: “everybody” had money to spend, life was beautiful… People consumed and made “growth” possible.
Lessons are now being learned and will probably be forgotten again by future generations, as they have in the past.

When is 75 greater than 100 and 50 greater than 75 (answer: when a store doubles coupons to $.99 or triples to $.50). I was just thinking about “consumers math” on my way home from the grocery store. I tried to purchase items on sale with a coupon on the last day of triples… I never learned about this type of math in school, but did learn about deals from my mom. Even she forgot to mention to prepare for triples for the day it started or you might not be able to purchase what you want.

Or, who would all the “righties” steal from? We can go on and on with inane useless comments like this or you can have something constructive to say. The idea that only democrats get in financial trouble is laughable…the idea that any one problem is reserved for just one side is so ludicrous it unvails the stupidity of the person making the statement. No, I do not believe that only people on the right steal from corporate positions. It was meant to be as ridiculous, as the prior statement. And, no, I do not use “righties” or “lefties” on a regular basis, as I like to sound somewhat respectable.

Hi – I teach personal finance in my business class in North Carolina. I am personally conflicted when teaching personal finance but our governments are financially irresponsible. Instead of learning to budget they raise taxes to pay for expense they could cut.

I never learned money management at home. Although I’m glad that my parents gave me the freedom to explore and learn financial literacy on my own. I learned it from books, mentors and audio/video tapes. I also don’t know why we are not taught financial literacy in school, but whatever the reason maybe, I think its important that as parents, we should teach our kids at home. MOney should be a regular subject talked within dining tables or during family time with the parents and kids. Time is our only treasure. We have to do it while they are young or else our kids will wake up one day trap in a financial quagmire.

My parents were cheap – they’d do things to save money tha’d end up costing a lot in the long run. & wasted a lot of time & money doing so.

My parents taught us nothing about finances – which is sad because at 16 and again at 18 I inherited large sums of money (can you say massive shopping spree & lots pf parties).
In the 9th grade my math teacher taught us how to balance a check book but that was it as far as what I learned about finances @ school.

At 19 I discovered the books “Simple Living Guide” and “Personal Finance for Dummies” and those both helped me figure things out and try to get on the right track. I wish I’d have found those books at 15.

I try to speak with my son (he’s 9) about finances – but i never know when I’m telling him too much. I hope I’m giving him enough info to not make the same mistakes I did… or at least as many.
I try to get him to do things for money – like mow lawns but when so many of his friends get money for nothing it makes it hard. He’s usually broke because he won’t work (there’s a list on our fridge of “paid chores” & ideas of things he could do for the neighbors) & when he does get some money he spends it ASAP. Our bank does give kids small prizes for deposits so he does deposit money in the bank – not as regularly as I’d like but he’s knows that money is for a car in 7 years that I won’t help him finance. Hopefully as he matures he’ll get better about it.

My parents taught me through their actions and behavior which isn’t always best. Being products of the depression I learned there was never enough. Unfortunately, I move from both extremes-hording to splurging. Neither very good.

It’s not a left or right thing, nor is it a Republican or Democratic thing. Either way, it’s a proven fact that the US government wants it’s people dumb and stupid when finance comes in order. Think about it: if a person becomes wealthy and wise, it is because they are educated and smart. Smart people don’t need to depend on a government. Also, smart, debt free people don’t need to work hard and a government wants it’s people working very hard. This is why finance education will never be taught in public schools, but as MMND noted, it is indeed taught in private (always religious) schools. I learned how to manage a check book, balance finances in my Senior year in a Catholic high school (as well as typing-the basis of ALL communication and home economics-managing a home life.)

Remember when Pres. Bush wanted to make Social Security a personal, private matter? What was the reaction of Congress? The government said that it’s people couldn’t be trusted to make the right choices over their own financial futures. Imagine a child telling it’s parents that it wanted to manage his/her own finances and being told by the mother/father that the kid didn’t have the intelligence to accomplish this. The kid will kinda-of-like shrug it’s shoulders and just go right on depending on the parents. This is exactly what the current administration is doing to it’s people right now: it is making all of us believe that we need the government to supply us with jobs, unemployment, health care, retirement and our future financial well being. Don’t give your life a second thought: the government will be taking care of everything. Don’t worry abut those nasty charge cards-the government passed a new law. Don’t worry about housing debt, car loans, over extending yourself-the govt will just change the law and make you right again. Doesn’t matter if the govt got you into the trouble in the first place. What did Bush say after 9/11? Go out and spend. Obama isn’t much better.

If you think education is the key and the cure, just remember that Wall Street is filled up to it’s eyeballs in business graduates. The Wharton School of Finance is the first to come to my mind. Anyone one to follow in the footsteps of the financial geniuses of Bear Stearns, Lehman Bros, Merrill Lynch, Goldman Sachs?

I’m disappointed that MMND finally had the chance to answer the age old question: “how do we make financially savvy children’ and her response was ‘I haven’t got a clue.’

There’s a reason why only ALL the religious schools (christian, muslim, jewish, etc. etc. etc.) teach basic financial management to it’s students. And there is also a reason why the ‘powers that be’ do everything in it’s power to crush anything with any religious connotation. Debt is slavery and a government wants it’s people in bondage. Now, living debt free isn’t a sure path to financial victory anymore because we have a current administration that is enslaving it’s people under a monstrous mountain of taxes.

Despite it all, experience has ALWAYS been the greatest teacher. All of us have been given the opportunity to finally learn some valuable financial lessons in life. If we learn them well and wisely, no one, and I mean, no one can ever take them away from us. And as all of us have commonly found out, you can’t borrow and spend your way out of a financial crisis. It’s just a matter of time when the government will also learn this valuable lesson.

@morrison wrote: I’m disappointed that MMND finally had the chance to answer the age old question: “how do we make financially savvy children’ and her response was ‘I haven’t got a clue.’

For the record, I was NOT responding to the question YOU posed in your comment above — rather, I was responding to the question, “… why are we not requiring schools to teach the subject…”, to which I really don’t know, and obviously, I’m very disappointed that we don’t.

FWIW, I’m surprised at the political bent of many of the comments here. I try to steer clear from the thorny topic of politics here on this blog. I will allow a debate re: politics AS THEY RELATE TO FINANCIAL EDUCATION for kids. Please stay on topic, be respectful and play nice with one another.

“If you think education is the key and the cure, just remember that Wall Street is filled up to it’s eyeballs in business graduates. The Wharton School of Finance is the first to come to my mind. Anyone one to follow in the footsteps of the financial geniuses of Bear Stearns, Lehman Bros, Merrill Lynch, Goldman Sachs?”

These people weren’t stupid…far from it. Goldman was packaging and selling CDOs to others (which they make money on for being the “creator”) and turning around and betting against those CDOs with derivatives. It was morals, firm culture (high high high risk), and short-term thinking that caused these firms to look foolish, not lack of brain power or education.

We were taught budgeting at an early age. We got an allowance and if we wanted something, we saved for it. I remember being given a dime every week and doing to school and buying a stamp to put in a book. Then, when it was filled we went to the bank and they used the book to start a savings account for us. I’ve had one since I was six or seven.

As a teen, we were given a clothing allowance – 35 years ago it was $20/month (enough for one item/month basically). We knew we had to save if we wanted a new winter coat (I think they gave us one big ticket item before the clothing allowance started). If we wanted the name brand, we paid several months of our clothing allowance for it. If we wanted the generic jeans, our money went farther.

Lastly, as a college student we were told we had a college fund. It was enough for one year at an ivy league school, 4 years at a state college and whatever was leftover we could keep. That was it and we weren’t getting any more. Also, we were told we were getting an education and not a wedding (our family had 4 girls, 0 boys!). They would loan us money for big ticket items like car down payments, or furniture- but it was always paid back.

Susan’s comment reminded me that my parents gave me a bank card linked to their account while I was in college. I was always rather proud they thought enough of me and trusted me enough to give me a card linked directly to their account.

Great post Jen – thanks for sharing! You certainly interview very well.
Interestingly, in collating the responses to a Money Survey for 12-29 year olds I completed this week, the vast majority of people (of all ages) received no financial literacy education at school.
The worst aspect though, is the portion who DID learn about money in class either a) didn’t enjoy it, b) didn’t find it useful or c) both. Sad, huh?
Therefore it’s very important we (government / corporate / private citizen) don’t sit on high and preach the virtues of having money skills. We need to reach people where they are, demonstrate the relevance of learning to manage their money and get buy-in from the student – no matter their age.
Thanks for being part of this worthwhile mission!
Smiles,
Stuart
Creator of the Money Mindset Mob
Enthusiastic believer in independent teens

Susan and Chad, my mom was so admittedly inept with money that she handed her checkbook over to me when I was 13 (when my parents divorced). I was responsible for keeping the account balanced and paying the bills. It was tough being thrown into it without much instruction, but (obviously) I figured it out eventually.

She also gave me and my two siblings a comparatively substantial monthly allowance so we could be responsible for budgeting for all of our own needs: school lunches, clothes, yearbooks, entertainment, school supplies, etc.

Ah, yes, Stuart, we do need to “demonstrate (to kids) the relevance of learning to manage their money”.

This is precisely how I grabbed my Jr Achievement class students’ attention. I showed them that if they started a small business that summer, worked for 4 summers through high school, and saved $2,000 of it each year in a tax-deferred retirement account ($8,000 total), they could have over one million dollars sitting there for them when they retired. This served as a great illustration of the power of compounding.

We then created small business plans, marketing plans, and budgets for each student. When the course was over, they each had motivation, relevance, and a workable plan. They were eager to start their own business that summer: lawn care, pet care, selling various items, babysitting, whatever. They were excited about discovering the job they enjoy doing, figuring out how to make money doing it, and learning the how-to nuts and bolts. And they shared a discussion with their parents about how to open a bank account / IRA together.

The course I teach is very indepth and I always emphasize paying cash, avoiding credit card debt and saving. I also teach the whys for each. I am a Dave Ramsey disciple and am in dismay over the way our governments misuse funds or lack there of. I did learn a lot from my mom – I had a savings account for as long I can remembr. I also had my own little church envelopes from an early age. Unfortunately people and governments no longer wait to satisfy wants and lump them together with their needs which has produced the mess our country is currently in.

My parents were the first to instill money-mangement skills in me. It started when I was in the fifth grade and started earning allowance. I quickly learned how to budget for what I wanted and save a little from all money I received. As I got older I joined Junior Achievement and DECA (Distributive Education Clubs of America). This helped with cementing what parents had already taught me. They showed me how to read the financial pages, track stocks and investments. They also talked about what kind of investing you do for the goals you want to achieve. I think the most effective lesson my parents gave me was the “This is your allowance and it’s all you get!” I essentially earned my allowance and I had to use it to pay for everything: school lunch, clothing, entertainment. They made sure they gave me enough to sufficiently cover these items and if I chose to use it on something else, I could not come to them to ask for more money, I had already been given my paycheck. Not enough money to go to the movies with my friends on Friday night? Oh well, see if they will loan you the money until payday. Budgeting 101. I learned very quickly the difference between a need and a want.

I think the simplicity of it all is just that. People think it can’t possibly be this simple. Sure, investing is a little more complicated but taking care of your basic spending and saving is not hard and the rewards are great.

Thank you Millionaire Mommy Next Door for showing us the simplicity and giving us insight into your views into today’s financial woes. I share your blogs with my three kids and feel it is never too early to start teaching your children how money really works and that it should be working for them!

Thanks for haring the clip, I enjoy the interview and your comments. I agree there should be teaching of financial matters in the schools. However recently I also read that the problems we have with the school system are not only the schools mistakes they are also the parent mistakes. All education starts at home and the parent need to read “Your money or your life” and dedicate time to their kids and time to educate themselves if they have to.

Thanks for the post on hyperinflation it was very interesting. By the way your skin is beautiful and you look very nice in the interview.

You are all right that financial literacy should begin at home – it is interesting that at our open houseswhen I tell Parents what I teach often ask if they can come and take my course. I also wanted to note that in North Carolina we have a great resource to assist in financial literacy it is
On Track Financial Education. You can access their website online at
OnTrackFinancialEducation.org

It’s a wise move to add practical life-skills class like financial literacy in the curriculum, but it’s not also bad to learn literature and stuff about Shakespeare, right? I think this financial literacy should start at home and then the broader scope of it in school.

I started giving my daughter a weekly allowance when she was 3 — $2 to spend or save, $0.50 for charity and $0.50 for long-term savings. When she would ask me to buy her things, I would say that I wouldn’t buy them for her, but she could spend her money. Of course at that age I had to tell her how much money she had, but she started being more discriminating in her wants surprisingly quickly. (Now, at 12, she gets $6.50/week — $5 to save or spend, $1 for long-term savings, and $0.50 for charity.) Every Christmas I match her charity money and she takes great joy in deciding where to gift it. Every time she reaches $100 in long-term savings we go to the bank and purchase an I-bond in her name. My goal is for her to be comfortable with having money and thinking about money. (I think one reason people burn through their discretionary money is that they aren’t comfortable having it around and “need” to exchange it for something that makes them comfortable.) So far I am pleased with how she is handling herself with money.

knowledge is knowledge. Parents r needed for all aspects of education. Math, history…finance. They need to support education. They don’t have to be the end all be all. They just need to ensure their kids r learning some where some how.

Financial education is not the responsibility of the schools – Parents have always been the most important teachers in all aspects of a child’s life. Schools are meant to supplement. I teach Business and 50% of the curriculum in my basic course is personal finance – how can one a successful business manager if they can not manage their own finance and like it or not the state of our economy indicates that many can not manage their personal finance.

Some parents are and stay poor because they lack personal financial skills. Does that mean their kids have to stay poor too?

We clearly have different views on the role of schools. I respect your opinion, but I think the school system should at the very minimum make sure all children are equipped with a set of basic skills that they need to be able to have a chance at a succesful life in our society: reading, basic math, basic personal finance.

I agree that schools shouldn’t interfere with strictly personal things but not spending more than you earn strikes me as not a question of personal opinion but a vital survival skill.

I had also heard that Tennessee required PF being taught in classes… so this video confirms that for me – didn’t know the other two, Utah and Missouri. As far as I know, in Canada, no PF teaching is mandatory in any province/territory, though I’m sure there are individual schools here and there where PF classes are offered as electives. There weren’t at my school in the 90’s, though…

Yes, blame the financial crisis on the public schools. There is not better scapegoat in this country. People screw up, must be because the schools didn’t teach them. You can’t teach people not to be GREEDY, and the CEO’s, CFO’s, and Madoff’s that made this mess were GREEDY. How about we blame them, not teachers.

@CK, I don’t think anyone here is blaming teachers. In my public school system, teachers don’t have leeway in teaching anything “extra”. They are pushed by the system to “teach to the test” — CSAP Scores. This means that in many cases drama, music, art, field trips, physical education, etc. have been eliminated to make time for more academics.

I have personally talked with local teachers who are frustrated by the CSAP system of teaching and the restrictions this imposes upon their curriculum.

Yes, parents are ultimately responsible for their children’s education. But here’s a problem I see: schools have their kids in attendance for about 6 hours a day. Add commuting time, extra-curricular programs, school-assigned homework, dinner and bath-time… and there simply isn’t enough awake time remaining for parents to add all the subjects that have been eliminated from the school system: art, drama, music, second languages, physical education… much less practical lifeskills like cooking, cleaning, social skills, morals and ethics… and personal finance.

And let’s not forget that kids NEED time to play.

With the current school set-up, there just doesn’t appear to be enough time in a day for kids to learn everything they “should” learn.

Personally, this is why my husband and I plan to homeschool our daughter part-time. We will be picky about the classes she spends her valuable time with, and we will fill in the gaps. Not all parents can afford to do this though.

To reiterate, my point wasn’t to blame anyone. I am simply posing that students — and our society — would be well served by receiving some personal finance education in school.

Thanks to everyone for the spirited discussion. As the Executive Producer for the forthcoming documentary movie, “Secrets of Money: The Financial Literacy Epidemic in America Exposed,” I think we all agree that we are not doing a good job of teaching fundamental Financial Literacy skills to the next generation.

According to the Jump$tart Coalition, only 3 states (Utah, Missouri and Tennessee), currently require high school students to take a dedicated semester-long class on the subject, which I find shocking. Yes, it is a shared responsibility of the school, the parents and also the individual. However, if we solely relied on parents to teach their kids everything they needed to know in life, we would not have schools in the first place.

I’ve authored quite a few op-ed articles about my thoughts on teaching Financial Literacy, which you can easily find by doing a web search. For some reason, this topic seems to be more taboo than religion, politics or sex, and we need to change that. It’s time to make smart sexy again!

Hope that you will all watch the documentary movie with your loved ones when it is released later this fall. Please check out our website for details and updates in the meantime. Thanks for your continued support of this important project to get the word out.

Although i learned world economy in school, i was never taught how to save my money wisely, or how to decide on my investments. Parents should understand that kids need real-life lessons to learn about money management.

Awesome project, I wish wish wish I had been taught how to manage, spend and save money. I am in my mid 40′ and I am still struggling. I don’t make enough to afford an advisor but I make enough to get myself into trouble.

Retirement is just around the corner and my 401k is taking a hit as well.

I never had a formal class on finance in school but I do recall some projects that were created to teach us about money and how to use it and how far it goes. We had to create a week of meals, using the products found in the weekly grocery circulars with a set amount of money. That project taught me many things; a. you can get by on much less if you eat ramen noodles three times a day, b. you really don’t want to eat ramen noodles three times a day and c. that if you plan and keep your eyes open, you can make your money go farther.

Very good lesson. I wish we had done some projects on getting married, trusting the opposite sex, not trusting salespeople and many other pitfalls I’ve fallen into since then.

I just found your blog and noticed this article. Even though it is from last year, it is definitely still a great topic.

Just yesterday, I completed some research on the topic of financial literacy. What I found on the schools teaching it was from an article in USA today from January 22, 2010. They stated that “The number of states requiring public high schools to offer a personal finance course rose from nine to 15 between 2007 and 2009, according to the Council for Economic Education. Thirteen states require a personal finance course for graduation, up from seven in 2007”.

I do think schools should require some basic coursework in personal finance to graduate high-school, but what subject will we need to give up to get it? And how will we train the teachers to teach it?

Parents and grandparents, along with the rest of the extended family must take a key role. I am planning to experiment with a ‘Grandma Money Camp” this year when I go to babysit my 2 grandchildren for a week. I will research and plot learning activities appropriate to their ages, run my plans by the parents, and then intersperse the learning activities with good old-fashioned grandma time!